Hill12e Chapter 14 TB Answer Key PDF

Preview

Summary

1 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the priorInternational Business, 12e (Hill)Chapter 14 The Organization of International Business Organizational structure refers to the totality of a firm's organization. Answer: FALSE Explanation:...

Description

International Business, 12e (Hill) Chapter 14

The Organization of International Business

1) Organizational structure refers to the totality of a firm's organization. Answer: FALSE Explanation: Organizational architecture refers to the totality of a firm's organization. Organizational structure refers to three things. First, the formal division of the organization into subunits; second, the location of decision-making responsibilities within that structure; and third, the establishment of integrating mechanisms to coordinate the activities of subunits. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 2) A manager receives a bonus because the national operating subsidiary that she is in charge of exceeds its performance target. This is an example of an incentive. Answer: TRUE Explanation: Incentives are the devices used to reward appropriate managerial behavior. Incentives are very closely tied to performance metrics. Difficulty: 2 Medium Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 3) A decentralized organization allows managers to respond to environmental changes more quickly than in a centralized organization. Answer: TRUE Explanation: Decentralization permits greater flexibility—more rapid response to environmental changes—because decisions do not have to be "referred up the hierarchy" unless they are exceptional in nature. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation

1 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

4) The choice between centralization and decentralization is absolute. Answer: FALSE Explanation: Decisions regarding overall firm strategy, major financial expenditures, financial objectives, and legal issues are typically centralized at the firm's headquarters. However, operating decisions, such as those relating to production, marketing, R&D, and human resource management, may or may not be centralized depending on the firm's strategy. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 5) Beyond the initial functional division of the organization, further horizontal differentiation may be required if the firm significantly diversifies its product offering, which takes the firm into different business areas. Answer: TRUE Explanation: Further horizontal differentiation may be required if the firm significantly diversifies its product offering, which takes the firm into different business areas. Problems of coordination and control arise when different business areas are managed within the framework of a functional structure. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 6) In a worldwide area structure, each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities. Answer: TRUE Explanation: Under the worldwide area structure, the world is divided into geographic areas. An area may be a country or a group of countries. Each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 2 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7) In a worldwide product divisional structure, each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities. Answer: TRUE Explanation: In a worldwide product division each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 8) The worldwide product division structure may create a lack of local responsiveness. Answer: TRUE Explanation: The main problem with the worldwide product division structure is the limited voice it gives to area or country managers, since they are seen as subservient to product division managers. The result can be a lack of local responsiveness, which can lead to performance problems. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 9) It is difficult to ascertain accountability in the global matrix structure. Answer: TRUE Explanation: The dual hierarchy in the global matrix structure can lead to conflict and perpetual power struggles between the areas and the product divisions, catching many managers in the middle. To make matters worse, it can prove difficult to ascertain accountability in this structure. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

3 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

10) The need for coordination between units is greatest in firms pursuing a localization strategy. Answer: FALSE Explanation: The need for coordination is lowest in firms pursuing a localization strategy, is higher in international companies, higher still in global companies, and highest of all in transnational companies. Firms pursuing a localization strategy are primarily concerned with local responsiveness. Difficulty: 2 Medium Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 11) Direct contact between subunit managers is the simplest integrating mechanism. Answer: TRUE Explanation: Direct contact between subunit managers is the simplest integrating mechanism. By this mechanism, managers of the various subunits simply contact each other whenever they have a common concern. Direct contact may not be effective if the managers have differing orientations that act to impede coordination. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 12) A knowledge network is a network for transmitting information within an organization that is based on formal organizational structure. Answer: FALSE Explanation: A knowledge network is a network for transmitting information within an organization that is based not on formal organization structure, but on informal contacts between managers within an enterprise and on distributed information systems. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

4 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

13) The basic principle behind incentive systems is to ensure that the incentive scheme for an individual employee is linked to an output target that he or she has some control over and can influence. Answer: TRUE Explanation: The basic principle is to make sure the incentive scheme for an individual employee is linked to an output target that he or she has some control over and can influence. The individual employees on the factory floor may not be able to exercise much influence over the performance of the entire operation, but they can influence the performance of their team, so incentive pay is tied to output at this level. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 14) Performance ambiguity lowers the cost of control. Answer: FALSE Explanation: Performance ambiguity raises the costs of control. The costs of control can be defined as the amount of time top management must devote to monitoring and evaluating subunits' performance. This is greater when the amount of performance ambiguity is greater. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 15) New processes that might lead to a competitive advantage can be developed anywhere within the organization's global network of operations. Answer: TRUE Explanation: It is particularly important for a multinational enterprise to recognize that valuable new processes that might lead to a competitive advantage can be developed anywhere within the organization's global network of operations. New processes may be developed by a local operating subsidiary in response to conditions pertaining to its market. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 5 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

16) Norms are abstract ideas about what a group believes to be good, right, and desirable. Answer: FALSE Explanation: Values are abstract ideas about what a group believes to be good, right, and desirable. Norms mean the social rules and guidelines that prescribe appropriate behavior in particular situations. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 17) An organizational culture can be strong but bad. Answer: TRUE Explanation: Strong does not necessarily mean good. A culture can be strong but bad. The culture of the Nazi Party in Germany was certainly strong, but it was most definitely not good. Difficulty: 1 Easy Topic: Forms Available for Structuring International Companies Learning Objective: 14-02 Describe the different organizational architecture choices that can be made in an international business. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 18) Firm ABC is pursuing a localization strategy that is focused on local responsiveness. Therefore, the need for integration and coordination between self-contained country subsidiaries is low. Answer: TRUE Explanation: Headquarters can manage foreign operations by relying primarily on output and bureaucratic controls and a policy of management by exception. Since the need for integration and coordination is low, the need for common processes and organizational culture is also quite low. Difficulty: 1 Easy Topic: Matching Organizations to Strategy to Improve Performance Learning Objective: 14-03 Explain how the organization architecture can be matched to global strategy to improve performance. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

6 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

19) Firms pursuing a localization strategy tend to operate with an array of formal and informal integrating mechanisms. Answer: FALSE Explanation: Firms pursuing a localization strategy do not have a high need for integrating mechanisms, either formal or informal, to knit together different national operations. Difficulty: 1 Easy Topic: Matching Organizations to Strategy to Improve Performance Learning Objective: 14-03 Explain how the organization architecture can be matched to global strategy to improve performance. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 20) A firm's organizational architecture must be consistent with its strategy. Answer: TRUE Explanation: In some industries, a global standardization strategy is most viable, in others an international or transnational strategy may be most viable, and in still others a localization strategy may be most viable. The firm's organizational architecture must be consistent with its strategy. Difficulty: 1 Easy Topic: Matching Organizations to Strategy to Improve Performance Learning Objective: 14-03 Explain how the organization architecture can be matched to global strategy to improve performance. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 21) It is important to realize that organizational change will occur regardless of the commitment of senior managers to it. Answer: FALSE Explanation: It is important to realize that change will not occur unless senior managers are committed to it. Senior managers must clearly articulate the need for change so employees understand both why it is being pursued and the benefits that will flow from successful change. Difficulty: 2 Medium Topic: Matching Organizations to Strategy to Improve Performance Learning Objective: 14-04 Discuss what is required for an international business to change its organization architecture so that it better matches its global strategy. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

7 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

22) Refreezing an organization should happen quickly. Answer: FALSE Explanation: Refreezing the organization takes longer. It may require a new culture be established while the old one is being dismantled. Difficulty: 1 Easy Topic: Matching Organizations to Strategy to Improve Performance Learning Objective: 14-04 Discuss what is required for an international business to change its organization architecture so that it better matches its global strategy. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 23) A firm's organizational culture refers to the A) norms and value systems that are shared among the employees of an organization. B) formal organizational structure of the company. C) control systems and incentives in place. D) human resources component. Answer: A Explanation: Organizational culture refers to the norms and value systems that are shared among the employees of an organization. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 24) Organizational structure includes several elements. Which of the following is one of them? A) The establishment of integrating mechanisms to coordinate the activities of subunits. B) The horizontal decision making that occurs daily, for example, on the plant floor to improve operations. C) The manner in which decisions are made and work is performed by individuals. D) The informal division of the organization into cultural groups. Answer: A Explanation: Organizational structure refers to three things: First, the formal division of the organization into subunits; second, the location of decision-making responsibilities within that structure; and third, the establishment of integrating mechanisms to coordinate the activities of subunits. Difficulty: 2 Medium Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

25) Which of the following terms refers to the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits? A) key processes B) control systems C) knowledge networks D) job evaluations Answer: B Explanation: Control systems are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 26) Historically, Unilever measured the performance of national operating subsidiary companies according to profitability. In this example, profitability is A) a control system. B) a process. C) an integrating mechanism. D) an incentive. Answer: A Explanation: Control systems are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. For example, historically Unilever measured the performance of national operating subsidiary companies according to profitability—profitability was the metric. Difficulty: 2 Medium Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by organizational architecture. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

9 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

27) The manner in which decisions are made and work is performed within the organization is known as the firm's A) organizational culture. B) incentives. C) control systems. D) processes. Answer: D Explanation: Processes are the manner in which decisions are made and work is performed within the organization. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 14-01 Explain what is meant by or...